jim chalmers

While avoiding recession is possible, the continuation of restrictive macroeconomic policies for the near term is needed to fight inflation, according to the IMF’s annual economic report card for Australia – and tax reform and stronger housing policies would also help.

In a special sitting Thursday, Parliament will vote on proposed price caps for coal and gas, which the government says will help curb soaring energy bills. Producers, which oppose the plan, have already seen their share prices drop.

With the new federal budget forecasting skyrocketing energy prices, the government is under increasing pressure to intervene. Treasurer Jim Chalmers has ruled out government handouts and is seeking regulatory solutions.

Inflationary pressures are expected to ease over the next six months according to federal budget forecasts, while consumer-focused and housing stocks could benefit from government policies aimed at boosting consumer spending and the availability of affordable housing.

The lack of any significant change in this week’s announcement should be welcomed. The job of our politicians is to govern throughout the year, not solely through the delivery of an annual or semi-annual budget.

Experts forecast a more balanced budget with an even-handed dispersion of revenue and spending measures. Income tax cuts will likely go ahead, while super should get a break from further tinkering.